Oct 20, 2026 earnings call — Record backlog and raised full-year outlook
RTX raised full-year adjusted sales outlook to a new range of $97 billion to $97.5 billion.
Revenue $25.0B (est $24.1B) · EPS $2.26 (est $1.78)
Key quotes
"On the defense side, we booked nearly $59 billion of awards with a book to bill of 4.57x."
"So far this year, we have received over 800 GTF orders and commitments and have a backlog of over 8 thousand engines."
"We now see adjusted EPS between $7.65 and $7.75 for the full year, up from our prior range of $7.10 to $7.25."
Analyst Q&A 12
missiles and munitions ramp
Q (Sheila Kahyaoglu · Jefferies): They asked about Raytheon margins and the missiles and munitions production ramp, including how volume and margin will feather into 2026 and beyond.
A: Management said Raytheon had strong organic sales and execution, with output across critical munitions up over 90%. They described converting framework agreements into binding UCAs worth about $70 billion that give nearly a decade of demand visibility and said execution now focuses on supply chain, tooling and removing bottlenecks. They expect these contracts can support margin expansion at Raytheon as production scales.
"Output across our critical munitions was up over 90% and we are seeing output growth across other critical munitions programs as well." — Christopher T. Calio (CEO·CHAIR)
cash conversion and investments
Q (Peter Arment · Baird): He asked how management thinks about cash conversion given the framework deals and Aero ramp, and whether framework CapEx or advances will affect cash flow going forward.
A: Management said fundamentals are strong and they expect to generate 90 to a 100% of free cash flow to adjusted net income, while investing to meet demand. They noted collaborative funding for UCAs and said focus is on supply chain and capacity; segment operating profit growth will drive cash outcomes.
"So then it comes down to segment operating profit growth, which we are expecting to see." — Neil G. Mitchill Jr.
airline customer behavior
Q (Robert Stallard · Vertical): He asked if airlines are cutting flight plans due to fuel costs and whether that changes airline customer behavior for Pratt and RTX.
A: Management said they are engaging closely with airlines on fleet planning and that Q3 showed resilient commercial aftermarket demand, with 16% organic growth in commercial aftermarket and strong GTF output up 35% year over year. They said demand looks durable, with strong fundamentals like out-of-warranty flight hours, pricing, and a growing installed base supporting medium- and long-term aftermarket positioning.
"So as we sit here today, Robert, demand has continued to be resilient." — Christopher T. Calio (CEO·CHAIR)
timing of munitions ramp
Q (Kristine Liwag · Morgan Stanley): She asked how to think about the cadence of revenue and earnings from converted framework agreements and whether ramping starts in 2027 or accelerates in 2028 and beyond.
A: Management said timing depends on defense budgets but they expect some booked revenue in 2026 and a ramp in 2027 as facilitation begins. They see the ramp starting in earnest over the next 2 years and continuing through 2030 into full-rate production for the munitions suite.
"I see this as, you know, starting to ramp you know, over the next 2 years in earnest." — Neil G. Mitchill Jr.
Collins margin sustainability
Q (Myles Walton · Wolfe): He asked why Collins' margin looks lower in implied Q4 and how sustainable the cost savings and margin improvement are.
A: Management said Collins had a strong, clean Q3 and the margins were not driven by one-off items. They said Q4 will have no repeat of AIPA refunds, higher R&D and digital spend, and some OE volume headwinds, but they expect operational margins to continue expanding into 2027.
"Fundamentally, the Collins margins remain really strong, and we expect the operational margins to continue to expand into 2027." — Neil G. Mitchill Jr.
protection if UCAs not finalized
Q (Ronald Epstein · BofA): He asked whether the undefinitized contracts (UCAs) are protected if budgets change and about component shortages like PCBs and capacitors.
A: Management said they will not go into detailed terms but are protected if budget or volume changes occur, and that protections were a critical part of discussions to allow moving quickly. They emphasized supply chain actions—streamlining testing, qualifying new suppliers, and working with the Department to prioritize critical components and secure long-term supply for 2027 and beyond.
"we are protected if there are changes in the budgetary environment and changes in volumes." — Christopher T. Calio (CEO·CHAIR)
right-to-repair impact
Q (Seth Seifman · JPMorgan): He asked about the potential impact of NDAA right-to-repair provisions across defense businesses and how the company thinks about it.
A: Management declined to speculate while the legislative process is ongoing and the 2027 budget is not final. They said they want to support customers' sustainment needs but also need protections for IP and investments, and they expect to balance those needs as the process plays out.
"we are also gonna need the kinds of protections around IP and protections around the investments, you know, that we have made" — Christopher T. Calio (CEO·CHAIR)
Pratt cash flow outlook
Q (Scott Deuschle · Deutsche Bank): He asked where Pratt and Whitney's free cash flow conversion is today relative to after-tax earnings and how that will trend.
A: Management said Pratt has generated substantial cash flow in 2026 and each year since the COVID trough, driven by commercial engines and MRO growth. They expect shop-visit overhauls to bring cash payments and said Pratt will be a tailwind to RTX's free cash flow over the next 3 years as MRO output and paid shop visits increase.
"Pratt will be, you know, a tailwind to RTX's free cash flow over the next 3 years." — Neil G. Mitchill Jr.
Pratt margins and drivers
Q (John Godyn · Citi): He asked how management assesses recent Pratt performance and how to think about margin expansion given strong aftermarket trends and MRO strength.
A: Management said margin expansion centers on the GTF: strong MRO performance, lower turnaround times, and content gains on the v2.5 thousand. They expect gradual margin growth over the next 5 years toward Pratt's longer-term goal, citing GTFF Advantage and Hot Section Plus cutovers plus growing GTF aftermarket as the drivers.
"We have talked about, Pratt, entitled to low to mid teens margins over the longer term." — Neil G. Mitchill Jr.
adding rocket motor supplier
Q (Scott Mikus · Melius): He asked whether RTX would consider acquiring a solid rocket motor supplier to help with the missile ramp.
A: Management said they constantly review supply chain constraints and may deploy capital to bring suppliers inhouse if needed, but for rocket motors they are expanding the supplier base and entering partnerships with other solid rocket motor suppliers. They said there are no immediate plans for acquisition on rocket motors; the approach is partnership-focused while always looking to strengthen supply.
"On Rocket Motors in particular, I will tell you we are expanding the supply base and entering into partnerships with other solid rocket motor suppliers" — Christopher T. Calio (CEO·CHAIR)
foreign backlog and profit rates
Q (Gautam Khanna · TD Cowen): He asked about the size and character of Raytheon's foreign backlog and whether missile framework profit rates approximate foreign backlog, and if this mix is a tailwind.
A: Management did not answer in the provided transcript excerpt; no response from management is recorded for this question. The transcript contains only the question and no management reply.
Pratt aftermarket details
Q (Kenneth Herbert · RBC): He asked whether the strong Pratt aftermarket growth was mostly GTFF and for updates on PW4, V25, and Pratt Canada aftermarket in the quarter.
A: Management said the majority of growth came from the GTFF aftermarket and that V2.5 thousand content remained solid, with Q3 lifted by particularly strong V program content. They reiterated the 800 shop visits outlook for 2026 is on track and expect that GTF growth will outweigh declines in V25-powered aircraft over time.
"the majority of that growth came from the GTFF aftermarket." — Neil G. Mitchill Jr.